Cheaper calls to mobiles may be illusory, despite ruling

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The cost of calls to mobile phones could halve, after the competition watchdog ruled phone companies must cut their charges for calls from landlines to mobiles.

But consumer groups and Telstra's rivals warned that fixed-line phone companies might not pass on all the savings to mobile phone users.

The Australian Competition and Consumer Commission yesterday ordered companies to slash their prices, after a 14-month review revealed they charge twice what it actually costs them to connect calls from one company's landline to another company's mobile service.

Known as termination fees, these charges inflate the prices Australians pay to call mobiles from landlines, which are arguably among the world's highest.

The commission estimates that it costs phone companies between five cents and 12 cents a minute - including a profit - to connect calls from landlines to mobiles. But the lowest termination fee available is 21 cents a minute.

The commission has ruled that companies must gradually reduce their charges to 12 cents a minute by 2007. The fees must drop to 21 cents today, followed by three reductions of three cents a minute on January 1 of the next three years.

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The commission said it expected calls to mobiles to cost half what they do now. But the Australian Consumers Association said it was highly unlikely consumers would see much of a change in the cost. "It is clear people are paying twice as much as they should, but there is no direct route between the reduction that has been mandated and the consumer," said a spokesman, Charles Britton.

Only the Government can force Telstra - the major fixed-line operator - to drop the price of calls from home phones to mobiles.